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False economies

IF YOU needed convincing that agriculture is in deep trouble throughout the
West, consider the following.

Huge and complex subsidies mean that food isn’t produced where it could be
most efficiently and that intensive methods are favoured over others that might
be better for the environment.

Attempts to put genetically modified crops in the shops currently has
consumers in Europe up in arms.

The sale of British beef in France—which French scientists are alone in
thinking might harbour significant risks of infection with BSE —has left
the leaders of neighbouring nations at each other’s throats.

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The stranglehold of huge supermarket chains is driving uniformity and wiping
out local varieties of fruits and crops with long histories.

From Kansas to Kent, family farms and community life are vanishing as the
economics of farming lurch this way and that.

And at the same time, food has never been available in such abundance and at
such low cost to the industrialised world.

But there’s the rub. That low cost—the great achievement of postwar
high-input intensive farming—may be partly an illusion. A new analysis of
British farming suggests that the total “external” cost of British farming may
be far higher than has been thought, almost equalling the total income generated
by farming itself(see p 10).

Those external costs are the costs that result from the present farming
system but that don’t have to appear in any individual farmer’s accounts. They
include such immediate effects as pollution of the water supply (water
authorities pay to clean up), damage to habitats (conservation agencies pay to
restore), and the health effects of air pollution (the health service pays).

Then there’s the longer-term effects—the impact of greenhouse emissions
and the costs resulting from global warming. But even if you are a short-term
thinker who is happy to leave these problems to another generation, the
immediate external costs of agriculture come close to half of agricultural
income.

What is to be done? Unfortunately, without a gigantic change in mindset by
the world’s politicians, not a lot. Despite the lack of progress at the recent
World Trade Organization meeting, the trend is towards freer trade and the
removal of subsidies.

A common belief among free traders is that removing subsidies will boost
agriculture in regions where food can be produced most efficiently, and these
regions will need the least interference to produce efficiently. Unfortunately,
there is little evidence to support this. Remember, many of the poorer nations
that could expand agriculture rapidly also harbour fragile and diverse
ecosystems that can be easily and rapidly wrecked.

Ideally, our food should be priced to reflect hidden costs so that market
forces really do move agriculture towards providing a more genuinely global
good. But that requires far more than removing subsidies. We can’t expect much
from our politicians: they have already spent decades failing to agree.

Which brings the responsibility back to the consumer and the power of
persuasion. And consumers have recently sent some strong messages to producers
through their preference for “organic” products—even though the term is
often hopelessly misleading.

What we need now is a real “good for the planet—all externalities
included” label that helps us reward agriculture for moving in the right
direction.